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The Oldest Trick In The Accounting Book: The Reason For Intel’s Massive EPS Beat In One Chart

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Moments ago, INTC reported EPS of $0.55 which solidly beat expectations $0.50, with revenue of $13.2 billion printing just above consensus, if a substantial 5% drop compared to the $13.8 billion one year ago.

This has sent the stock soaring in the after hours by about 6%. This is also despite the company lowering it full year revenue guidance from flat to -1%, with the bulls saying just look at that massive EPS beat.

So for all those wondering just how INTC did it, here’s the reason for Intel’s beat in one simple chart:

In other words, it is only thanks to the oldest trick in the accounting book, an artificially low tax rate, that INTC was able to make its plunging operating income, which was down 25% from a year ago, better than expected and make its EPS of $0.55 equal to the $0.55 reported one year ago.

Crashing Operating Income:

And yet, flat EPS:

If INTC had used a 29% tax rate – the same as last year - EPS would have been $0.43, a 7 cent loss and that’s even using a more modern trick in the accounting book, some $700 million in stock buybacks!

And that is how you use report unchanged EPS from a year ago despit sliding revenues and plunging earnings.


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